TOKYO, June 26 (Kyodo) — (EDS: RECASTING THROUGHOUT WITH CITIBANK'S COMMENTS AND OTHER INFO)
The Financial Services Agency on Friday ordered Citibank Japan Ltd. to suspend sales activities at its retail banking division for one month from July 15 because of its slack money laundering controls that allowed the opening of several hundred accounts for crime syndicates and other "antisocial' bodies.
It is the second administrative punishment for the U.S. bank over insufficient measures to prevent money laundering, following the first one in September 2004.
All sales operations at Citibank Japan's retail banking division in Japan will be suspended, including advertising, sales campaigns and solicitation, from July 15 to August 14, but the bank will be allowed to provide services to new and existing customers at their request, the FSA said.
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The agency also required the bank to clarify its management responsibility and to submit an initial report on business improvement measures by July 31 as well as follow-up reports every three months.
Despite the FSA's first administrative order to Citibank Japan to ensure anti-money laundering checks, the agency concluded that the bank had not taken sufficient steps.
The bank's arrangements concerning the reporting of suspicious transactions, notably money laundering, hinge on detection chiefly through a database.
However, the data entered in the database are "extremely limited," the agency said in a statement, adding "the database has not been updated since 2004."
"Procedures to control any dealing with anti-social forces have not been developed," it said.
Citibank Japan issued a statement the same day expressing its "sincere apologies" to customers and others. "Citibank Japan is committed to implement all necessary measures to prevent any future occurrence of the problems identified," it said.
Banks are required by law to notify the government of any suspicious transactions as soon as they are found in order to prevent money laundering.